Insights

EXECUTIVE COMPENSATION, PENSION & BENEFITS, INVESTMENT ADVISER LAW

Are Your Plan Files Complete? What an Auditor Will Want to See

All plan fiduciaries should keep an ‘‘audit file” with the documents that determine how the plan is run and required disclosures. This file starts with the plan and all amendments, but should contain lots of other things. I came across this post from forusall that clearly lays out what you should keep. A couple of additional pointers—

· Make sure that your plan document and amendments are signed and dated. If the corporate practice is to adopt these by resolution instead of an officer’s or committee member's signature, attach a certified copy of the resolution to the document. When I do diligence for acquisitions, I am surprised by the number of unsigned documents and documents marked “draft” that are provided by sellers. Like an auditor, I want proof that these documents were adopted and I need to know the date of adoption to see whether adoption was timely. Don’t keep an auditor waiting while you piece all that together after the fact.

· Each year, fiduciaries need to review their bonding coverage and determine whether the amount of coverage required has increased. The basic requirement is to have a bond with a coverage amount no less than 10% of plan assets handled during the preceding year, up to a maximum of $500,000, though a higher maximum applies if your plan holds employer stock. If your plan assets are increasing due to additional contributions and investment return, as is typical, you will need to increase your bonding coverage over time. Don’t just put that bond in a file and never look at it again.